The market wasn't exactly rushing to light up on marijuana stock Curaleaf Holdings (CURLF 0.66%) on Monday. More than a few investors were spooked by the pronouncements of a top Washington, D.C. law enforcement official on the retail pot business, and elected to trade out of the shares. They closed the day more than 7% lower in price, while the S&P 500 index more or less flat-lined.
Problem with a pot purveyor
That official is Ed Martin, who is currently serving as the interim U.S. Attorney for the District and being grilled by the Senate in order to gain confirmation to remove the "interim" designation.
In a TV interview on Friday, Martin offered remarks about a recent move to send a letter to a D.C. dispensary, Green Theory, that implied the business could be subject to federal prosecution. He claimed that while the dispensary was operating within the frame of local law, it violated U.S. law by being less than 1,000 feet from a school campus.
"I want to get to the bottom of it," Martin said in the interview. "I think -- look, my instinct is that it shouldn't be in the community based on what I saw from the parents."
Although President Trump has signaled support for legal marijuana initiatives in the past, his administration seems to be taking a more conservative stand against this. Investors surely fear that moves like Martin's letter could signal a get-tougher approach to an industry that is already struggling with numerous challenges, not least of which is a widespread lack of profitability.
OTC: CURLF
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For patient investors only
I don't think marijuana investors should necessarily head for the exit just yet. There is much support for decriminalization throughout this country, and at some point the most influential politicians will realize this and get behind big reform measures -- eventually, that is. Investing in companies like Curaleaf is difficult for sure, but I think there will be rewards at the end of the long journey.
